I will be doing a four part serious called, "How to Tackle Buying as a First Time Home Buyer". We will be starting today and I will post a new blog post each week with some key tips to set you up for success.
Buying a home can be a very exciting and scary at the same time, especially for a first-time home buyer. Buying a home is one of the most important purchases you can make in your life, but the process is far from easy and could be full of unfamiliar terms and surprise expenses.
To help you with this journey, I have complied a list of tips to help you navigate the process. These are common tips that I have gathered from several experts and experience I have had with first-time home buyers. Let's get started….
1. Start saving for a down payment early
With a Conventional Loan it pretty common to be required to put down 20%, but in some circumstances the lender may allow for lower down payment. In some cases, you may only be required to put down as little as 3% through an FHA loan (Federal Housing Administration). When putting down a lower down payment you can expect the potential for a higher monthly payment to include private mortgage insurance. Keep in mind that even with 5% you may be looking at a $10,000 down payment on a $200,000 home.
To help you reach your goal consider setting aside any yearly bonuses from your employer, tax refunds and even opening a savings account where the funds can be automatically deducted from your paycheck.
2. Check your credit
One of the key steps to your journey of home buying is to check your credit. Your credit is one of the key factors for approval of your mortgage loan and will determine your interest rate along with your loan amount.
Make sure you check your credit regularly and ensure that all information is accurate. Dispute any errors and also determine if there are any areas where you can improve your credit, such as paying down any outstanding debts.
Download a credit monitoring app such as Credit Karma in order to keep close track to your credit throughout your home purchase process.
3. Hold off on opening any new credit lines
When applying for new credit you will be hit with a hard inquiry. In many cases this can cause an immediate decrease to your credit score. If you plan to apply to for a mortgage loan in the near future, avoid opening any new credit accounts (i.e. car, credit card, personal loans), to prevent any dip in your credit score.
4. Look into any alternate down payment options
Are you worried you may not be able to save that needed 20% or 5% for your down payment? There are so many programs to assist you in hitting your down payment goal. There are several federal mortgage programs with both Fannie Mae and Freddie Mac that allow for down payments as low as 3%. There are other options such as:
· Federal Housing Administration loans which allow for down payments as low as 3.5%
· Veteran Affairs Loans which are accessible for veterans and in most case requires zero down payment
· Personal gifts from friends and family to help reach your goal
· Ohio Housing Finance Agency (OHFA) can assistance to cover your down payment up to 5% [Ohio Specific]
Check out next week's blog for more tips! You can give me a call or send me a note and I can answer any questions you may have so you can get started now!!!